We study selection effects associated with changes in the public pension system.
Individuals can influence their pension wealth by using knowledge about own life
expectancy when decisions is made when to draw old age pension. Individuals with
lower life expectancy than the average will maximize pension wealth by drawing pension
as early as possible, while individuals with higher life expectancy than the average will
increase their pensions if they defer drawing a pension. The selection issue is analyzed using Swedish population data from Statistics centralbyrån and econometric models. The main result of the analysis is that individual life expectancy has little or no effect on the decision when to claim old age pension in the new system, but that increased life expectancy increases the probability to work longer, and for men to a greater extent after the introduction of reform. The lack of a significant effect of life expectancy on early claims might be due to institutional rules, insufficient knowledge about the pension rules, risk aversion and a close connection between the pension claims and retirement.